Published: February 21, 2013 at 1:24 pm

3-D printing veteran 3D Systems Corporation (NYSE:DDD) reports fourth-quarter results on Monday morning next week. Expectations are sky-high: The stock has soared 166% over the last year, despite losing some steam in the final stretch. Shares plunged 6.7% today and more than 16% since Feb. 11.

Analysts expect the company to report adjusted earnings of $0.38 per share, up 137% from $0.16 last year. Sales should jump nearly 50% to $104 million. With numbers like these, it’s easy to see why investors are excited about the stock.

Just how realistic are these soaring targets?

Word on the Street
3-D Systems analysts have actually been pretty reliable so far. When they err, it’s been on the side of caution. Earnings estimates have been spot-on for two of the five quarters in 3-D Systems’ young history as a public company, with solid beats in the other three periods. The story is the same on the revenue line. So it’s not like Wall Street likes to set unreachable targets for this company.

Analyst targets are also pretty much in line with management guidance. The company raised its full-year targets three months ago to account for strong demand in the third quarter. In particular, CFO Abe Reichental based his estimates on the company’s position to “monetize the expanding rapid manufacturing and health care opportunities in the emerging consumer opportunities.” In other words, there’s a quickly growing market for printing custom medical devices and other highly specialized consumer-oriented parts.

Now, the 3-D printing industry has come under fire from skeptics calling it a bubble with unsustainable valuations. These stocks sure shouldn’t appeal to traditional value investors — 3-D systems trades at 29 times forward EBITDA estimates, rival Stratasys, Ltd. (NASDAQ:SSYS) goes for 27 times EBITDA, and brand-new upstart ExOne Co (NASDAQ:XONE) a hair-raising 139 times. They also sell at very large multiples to current and forward sales, and don’t look cheap in any light I can think of.

You get what you pay for!
But huge growth never comes cheap. That’s one of the core tenets of our Rule Breakers newsletter, which often recommends big winners at seemingly insane prices — and has more than doubled the S&P 500′s returns since 2004 with that strategy. Stratasys is not only a recommendation here, but a core holding. Fool founder David Gardner, who manages Rule Breakers, has also recommend 3-D Systems in our Stock Advisor service — twice! The stock was recently picked as a “best buy now.” The man clearly believes in 3-D printing, even at these supposedly crazy prices.

3-D printing in general is poised to turn the manufacturing world upside down. The devices are inching down into affordable territory for common American households, and could soon become as mainstream as smartphones and single-serve coffee makers are today. When that happens, all three of these companies should start growing into their valuation on the back of exploding demand for renewable printing supplies. It’s the old razor-and-blades models all over again.

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